Sale Deed - Advantages and Importance in Home Loans

If you’re about to purchase your dream home through a housing loan, it is essential to thoroughly understand all the documents you’ll need for loan application and disbursal. One of the documents you’ll have to submit to your loan provider is the sale deed. The original sale deed of the property will be with the lender throughout the repayment duration.Once the loan is fully repaid, the loan provider will return the sale deed and other property documents to the borrower. What is the sale deed? What role does it play in a housing loan? Take a look-

A sale deed is the most important legal document that is used as evidence in property transactions. It showcases the transfer of property ownership, rights, and title from the seller to the buyer. Until the seller and the buyer sign the sale deed, the property transaction is not considered legally complete.Once the seller and buyer are fully satisfied with the terms and conditions of the transaction, both parties sign the sale deed to give legal status to the transfer.

A sale deed and agreement of sale or sale agreement are not the same. As mentioned above, a sale deed legally transfers the ownership rights from the seller to the buyer.On the other hand, an agreement of sale is a contract that states the terms that the buyer and seller have agreed upon for the property transaction. The document specifies all the terms and conditions according to which the property will be sold or transferred. Unlike the sale deed, the sale agreement does not establish or develop any interest or rights in a property for a buyer.

Some of the top benefits of a sale deed are as follows-

• As a sale deed is a legal document, it provides legal recognition to any property transaction
• It provides detailed information about the property, including property location, construction area, plot area, etc.
• The document states all the rights and obligations of the transferee (buyer) and transferor (seller).
• The sale deed can also be used as evidence in case of any dispute regarding the property.
• Sale deeds are enforceable by law as it concludes the property sale into a legal document.

A sale deed generally included the below-mentioned details-

• Party Description Name, age, address of both the parties.
• Property Description Exact address, property dimensions, construction details, etc.
• Indemnity Clause The selling party declares it will be responsible for paying the monetary damages, if any, to the buying party in case of any dispute regarding property ownership.
• Default Clause In case of default, the defaulting party will be required to pay the penalty to the other party.
• Transaction Description Final price of the deal, including the advance payment received by the seller and the mode of payment.
• Transfer Duration Total period for transferring ownership from seller to buyer,including all the original property documents.

Sellers are generally required to create the sale deed with assistance from a lawyer. Here are the steps involved in the process-

• Based on the details collected from the seller, the lawyer will prepare an initial draft of the sale deed for evaluation and approval.
• Once the draft is approved, the sale deed is printed on a non-judicial stamp paper.
• The lawyer will also be responsible for making an appointment in the local sub-registrar’s office of the jurisdiction where the property is located.
• The buyer and seller, along with two witnesses, will have to visit the sub-registrar’s office to sign the document and pay the registration fee for registering the deed.
• After signing and payment of registration charges, the sub-registrar’s office will issue the sale deed.

As per the Registration Act, 1908, applicable stamp duty should be paid within 4 months from the execution of the sale deed. According to law, the buyer is responsible for paying the registration charges and stamp duty. It is also important to note that the stamp duty ranges between 4% to 10% of the sell value of the property in different cities across the country.

Now that you know what is a sale deed , let us quickly understand its importance in a home loan.Once the sale deed is executed and registered, the buyer must submit it to the lender if the property is purchased through a home loan . To initiate loan disbursal, the borrower is required to submit a number of property-related documents to the lender, including the original sale deed.The lender will hold on to the sale deed until the loan is fully repaid. According to the law, the lender is required to return the sale deed to the borrower within 15 days from when the home loan is fully repaid.

If you are about to purchase a home, give special attention to the sale deed and read all the terms and conditions on the document before signing. Consider professional assistance in case of any queries to avoid any discrepancies in the future.As for choosing the loan provider, consider a reputed lender that offers home loans at competitive interest rates to help you fulfil the dream of being a homeowner with maximum savings.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.